The money corrupted the local politics so badly that not only was it wasted, it impoverished, sometimes even leading to civil war. Can the governments of developed countries do anything to reduce the risks of repetition? Well, where do corrupt politicians put their money?
They certainly do not leave it in their own banks, it comes to banks in developed countries. And what do developed country banks do? Basically, they keep quiet about it. Is this a necessary consequence of banking secrecy laws? No it is not. If the money is suspected of having terrorist associations then, very sensibly, we now require the banks to blow the whistle on it.
But if its stolen from the ordinary citizens of the bottom billion, well that is just too bad. A third policy issue is security. It has not been necessary: the commitment alone is sufficient. Civil wars have been devastating to Africa: the one in Sierra Leone delivered the coup de grace to an economy that had already been wrecked by revenues from diamonds. Across the region there are now several postconflict situations that need this sort of commitment.
To date, nearly half of all post-conflict countries revert to war within a decade: we should surely be able to make a difference here. The western powers are afraid that sending troops abroad will be unpopular, and the governments of the bottom billion fear that western involvement would license preemptive invasions. However, I should stress that I do not see them as alternatives to aid but as complements. Think how the US responded to the need to rebuild Europe after Their argument is that the modern level of prosperity rests upon political foundations.
Proximately, prosperity is generated by investment and innovation, but these are acts of faith: investors and innovators must have credible reasons to think that, if successful, they will not be plundered by the powerful. For the polity to provide such reassurance, two conditions have to hold: power has to be centralised and the institutions of power have to be inclusive.
Without centralised power, there is disorder, which is anathema to investment. China most certainly ticks this box — it has centralised power and order in spades. But China resoundingly fails to tick the box of inclusive institutions. That states need order to prosper is important but no longer controversial. Their argument is that order without inclusive institutions may enable an economy to escape poverty, but will not permit the full ascent to modern prosperity.
So, if inclusive institutions are necessary, how do they come about? They argue that there is no natural process whereby rising prosperity in an autocracy evolves into inclusion. Rather, it is only in the interest of the elite to cede power to inclusive institutions if confronted by something even worse, namely the prospect of revolution.
Moreover, Collier advises poor countries to implement appropriate trade policies. He argues that if poor countries expand their exports they can enhance their development. Like Collier, Acemoglu and James believe that aid and enhanced governance would help the poor nations in a number of ways. He asserts that aid donors should demand responsibility from the beneficiary governments.
Equally, he suggests that many transformations should be undertaken to ensure that the beneficiary countries to take donor aids seriously. Currently, deficient incentives are in place to make certain that the money is paid to competitive developments with negligible expenses. He notes that there is nonexistence of harmonization among donors to make certain sanction not in favor of governments or agencies suspected of malpractice.
Additionally, he asserts that there is a modest effort to keep an eye on actual development delivery after money has been paid. He urges the donors to put in place measures to ensure that aids are spent in the right projects and to ensure that the beneficiaries are accountable.
Acemoglu and James illustrate how failure in institutions has made the developing countries poorer. According to him, the developing countries can escape from the traps of poverty if they come up and implement appropriate policies in their institutions.
Collier believes that poor countries are poor because of their societies, while Acemoglu and James believe that developing countries are poor because of failure in their institutions. In conclusion, it should be noted that a number of interrelated factors have made some countries poor. According to Collier, these factors include conflict trap, natural resource trap, bad governance, and bordering with conflict-ridden nations.
On the other hand, Acemoglu and James believe that culture hypothesis, geographical hypothesis, and ignorance hypothesis are the major cause of poverty in developing nations. Acemoglu and James believe that conflicts are the major leading cause of underdevelopment in poor countries. Acemoglu, Daron, and James A. Why nations fail: the origins of power, prosperity, and poverty. New York: Crown Publishers, Collier, Paul.
The bottom billion: why the poorest countries are failing and what can be done about it. Oxford: Oxford University Press, Need a custom Book Review sample written from scratch by professional specifically for you? We use cookies to give you the best experience possible. If you continue, we will assume that you agree to our Cookies Policy. Table of Contents. Why some countries are poor Role of conflict in development What poor countries should do to prosper? Conclusion Works Cited.
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